The UK National Health Service (NHS) consumes 9% of GDP and 20% of government spending.
Given the ageing population and increasingly expensive treatments, this does not at first look like an area for potential savings. This report by Policy Exchange ‘The NHS – a Suitable Case for Treatment?’ looks at alternatives.
Among other comparisons, it looks at the health model in Singapore. In designing their health system with mixed provision and greater personal responsibility, Lee Kuan Yew’s approach was part of his concern about welfarism in general. He believed that universal, socialised, “cradle to the grave” support would, in the medium to long term, invite expanding demand and “ballooning” costs, and these could only be funded by progressively increasing the tax burden on the hardworking and enterprising.
One weakness of the report is its comprehensiveness. It is a well-informed discussion document with options. It is not ‘manifesto-ready’.
Policy Recommendations Summary
Reforms within the Current NHS Model:
- GP Visit Fees: Introduce a £20 fee for GP visits (exempting low-income groups), potentially raising £5bn annually, reducing demand, and cutting missed appointments. Downside: some may delay necessary visits, leading to untreated conditions and higher costs later, though this is expected to be minor.
- Prescription Charges: Remove free prescriptions for over-60s, aligning them with others, with exemptions for low-income individuals, saving up to £1bn annually.
- Hospital Accommodation: Charge for premium hospital accommodations, raising £0.7bn.
- Agency Staff Reduction: Reduce reliance on expensive agency staff, saving ~£1bn net annually.
- Regional Pay: End centralized pay bargaining to allow regional pay variations, saving ~£2bn annually.
- Administrative Savings: Halve administrative costs through better technology use, saving £1.4bn annually.
- Total Savings: ~£11bn for England, ~£13bn UK-wide.
- Personal Responsibility: Promote personal health responsibility (e.g., Singapore model), with fines for missed appointments and incentives for preventative health programs (e.g., screenings, smoking cessation, fitness).
- Tax-Deductible Insurance: Make health insurance premiums tax-deductible (costing ~£500m annually), though this could complicate a shift to a universal insurance model.
Shift to an Insurance-Based System:
- Transition to Social Insurance: Move to a compulsory social insurance model (e.g., Dutch system) for universal, affordable healthcare, with basic plans supplemented by additional policies and co-payments.
- Public Preparation: Communicate healthcare cost contributions to taxpayers (via HMRC tax breakdowns) to ease the transition.
- Provider Competition: Encourage competition among insurers and providers, with insurers acting as prudent service purchasers.
- Government Role: Use tax funds to subsidize premiums for those with chronic illnesses or low incomes; regulate insurers and providers.
- NHS Branding: Retain the NHS name, emphasizing financing changes.
- Tax Reduction Link: Tie savings to tax reductions (e.g., NHS rebate vouchers) to make reforms politically viable.
- Phased Transition: Convert Integrated Care Boards (ICBs) into non-profit insurers initially, then allow them to contract freely with providers. Convert hospitals to not-for-profit foundations and allow new specialist centers under regulation.
- Social Care: Shift social care funding to an insurance-based model, potentially before medical care.
This dual approach aims to save costs within the current NHS framework while transitioning to a more sustainable insurance-based system.